Essay, Research Paper: Aol Time Warner Analysis

COMPANY OVERVIEW


OWNERSHIP STRUCTURE

Time Warner- America On-Line's ownership
structure consists of the Board of Directors,
Senior Corporate Executives, and Senior Corporate
Officers. It is the largest Internet company in
the world. America-On Line aims to shape the
Internet Age through providing outstanding
services as a provider, partner, and a corporate
citizen. The company believes that social
responsibility is a very integral part of their
mission. They aim to provide the highest quality
products and services and to act with integrity,
and contribute to the common good. The company's
corporate life and culture stresses on promoting
an ethic of volunteerism and civic engagement.


MISSION:

To become the world's most respected and valued
company by connecting, informing, and entertaining
people everywhere in innovative ways that will
enrich their lives.


VALUES:

The company stresses on the following values:
creativity, customer focus, agility, teamwork,
integrity, diversity, and responsibility.

AOL TIME WARNER'S OTHER BUSINESSES:

In order to maximize the value of the company's
combination of brands and other assets and to push
forward future growth that will revolutionize the
media and communications industry, their main
focus lies in subscription services, advertising
and commerce, and content.

Interactive Services and Properties: AOL

Networks: Turner Broadcasting
Home Box office

Publishing: Time Inc.
Time Warner Trade Publishing

Filmed Entertainment: Warner Bros.
New Line Cinema

Music: Warner Music Group

Cable Systems: Time Warner Cable
FINANCIAL INFORMATION
Following its $106.2 Billion merger with
Entertainment giant Time Warner, AOL managed to
fight off the first-quarter blues that impacted
nearly every other Internet company and posted
positive numbers. During the first quarter of
2001, AOL soared from $1.81 Billion to $ 2.12
Billion as ad and commerce revenue rose 37%
totalling $731Million.
Financial analysts were proven wrong when
revenues rose 9% from $8.32 Billion to $9.08
Billion. Analysts attributed the gains to some of
AOL's cross-promotional activity with Time Warner
as well as its marketing might. In terms of
on-line advertising shares AOL controls 45% of the
total market.
Bob Pittman, the Chief Operating Officer of AOL
forecasts sales of $40 Billion this year, a 12%
increase over 2000 and $11 Billion before taxes in
earnings. Therefore increasing earnings 30% over
last year.
Though their stock has fallen from $69 last May
to $35 at present, the number of subscribers
continue to rise. In fact, AOL brings more than 31
Million total subscribers globally. The Company's
reported net loss, including merger-related
expenses and pre-tax non-cash charges of $620
million reflecting the write-down of certain
investments in the AOL Time Warner investment
portfolio, was $1.4 billion, or $0.31 per share.
On the same basis in the year-ago quarter, the
Company's reported net loss, including one-time
events, was $1.5 billion, or $0.34 per share.

In addition, the quarter's specific highlights
include:
* Subscriptions: AOL Time Warner's total
subscriptions grew to more than 133 million, a
nearly 16% increase during the year. In the
quarter, the flagship AOL service alone added more
than 2 million new members for a total of 28.8
million.
* Advertising and Commerce: Strong growth in
advertising and commerce revenues were led by
year-over-year increases of 37% at America Online
and 17% at Time Warner Cable.
* Share Repurchase Program: The Company
repurchased 14.1 million shares of its common
stock at a cost of $615 million, as part of its
previously announced program to repurchase up to
$5 billion over the next two years.

The schedules below reflect AOL Time Warner's
performance for the March quarter (in millions):


CONTACTS:

Edward Adler Tricia Primrose
Corporate Communications Corporate Communications
(212) 484-6630 (212) 484-7450

Richard Hanlon Eileen Naughton
Investor Relations Investor Relations
(703) 265-1271 (212) 484-7640
PUBLIC RELATIONS EFFORTS
AOL Time Warner believes that developing media
and communications policies are essential in the
Internet Century. The following are the company's
position on specific issues of public policy:

Education and the 21st Century Literacy Issues:
AOL Time Warner believes that public policy must
reflect the changing landscape of education and
the changing needs of young people entering
today's job market. The AOL Time Warner
Foundation is committed to making technology,
education and 21st century literacy public policy
priorities at the federal, state and local level.

Closing the Digital Divide:
AOL Time Warner supports a wide range of
initiatives designed to develop the information
infrastructure, provide better education and
awareness, and bolster community-based projects
around the world. The company is committed to
working with lawmakers and advocates to encourage
a policy and regulatory environment that fosters
widespread access to information and
communications technology in the U.S. and abroad.

Privacy, Security, and Consumer Protection:
AOL Time Warner has established the strongest
consumer protection and privacy standards in the
industry. Their commitment to ensuring children's
online privacy and security is a centerpiece of
the public policy agenda: from putting in place
special parental controls that help parents guide
their children's online experience, to working
within the industry to increase public awareness,
provide families with valuable new tools and
resources for the Information Age, and teach young
people what they need to know to have a safe,
enriching experience in cyberspace.
AOL Time Warner is committed to helping establish
industry-wide standards that benefit the
development of the online medium and consumers.

Consumer Choice of Internet Service Providers:
The coming of broadband technology is
turbo-charging media and communications "” and
benefiting consumers in innovative new ways. AOL
Time Warner's multi-year investment in fiber optic
and digital technology already enables more than
12 million consumers around the country to receive
more and better video programming, enhanced
picture and sound quality, improved signal
reliability and advanced communications products
and services. They are committed to working within
the industry and with lawmakers to promote
market-driven policies that encourage the
continuation of this robust and innovative
environment for new digital services and expanded
consumer choice.

The First Amendment:
The First Amendment also protects freedom of
expression "” and AOL Time Warner is committed to
fostering human imagination and creativity. And
the company will continue to oppose efforts to
censor, intimidate or chill the freedom to express
what is in our hearts and minds.
Since the first Internet content debate in 1995
concerning the Communications Decency Act, efforts
to regulate Internet content "” from sex to
gambling to advertising and other content "” have
continued apace. AOL Time Warner has long been an
advocate of putting those decisions "” through
technology "” in the hands of consumers.

Responsible Guidance on Entertainment:
AOL Time Warner is dedicated to providing
world-class entertainment, both online and off.
Across all of our businesses, our company takes
our responsibility to consumers seriously "”
providing them with the guidance they need to make
informed decisions for themselves and their
families.
Intellectual Property:
AOL Time Warner supports strong protection of
intellectual property rights, both online and off.
They have a long history of supporting efforts to
combat piracy of videocassettes, CDs, books and
more. Enforcement of existing law, development of
protective technology and new business plans to
make these works available to everyone in every
format, on every device, and over every medium,
regardless of ownership, are of high importance to
their strategy on intellectual property
protection.
At the same time, AOL Time Warner believes that
liability rules for infringing material and other
illegal content should never unnecessarily impede
innovation.

International Telecommunications Issues:
AOL Time Warner is working to eliminate outmoded
barriers to trade and impediments to the free flow
of information caused by legacy telecommunications
systems, while respecting existing frameworks and
cultural differences, and strengthening their
global commitment to protect consumers and
children. In addition, the company is working
toward privatization and liberalization of
national telecommunications and communications
marketplaces, so the Internet is affordable for
the greatest number of people.

Trade and E-Commerce:
AOL Time Warner is actively working to persuade
WTO members to commit to opening their markets in
sectors critical to initiating and completing an
e-commerce transaction. In addition, AOL Time
Warner believes that Internet-based electronic
transmissions should not be subject to tariffs or
any customs duties, and that national regulations
affecting e-commerce should be non-discriminatory,
transparent and the least restrictive of trade as
possible.

Postal Rates:
In an environment where US Postal Service volume "”
especially in First Class, which serves so many
businesses "” could decline from electronic
competition, AOL Time Warner is working with all
other stakeholders in the system to develop
innovative and forward-looking policies that help
to maintain a Postal Service that the public
expects and business needs to thrive in the 21st
Century.


AOL Time Warner Foundation and Corporate
Citizenship

AOL Time Warner hopes to utilise the Foundation
to set higher standards for corporate citizenship.
The company aims to combine its communications,
media and information technology strengths to
educate, inform and inspire people around the
world.

The AOL Time Warner Foundation believes the areas
where it can impact the most are Equipping Kids
for a Better Future, Extending Internet Benefits
to All, Engaging Communities in the Arts, and
Empowering Citizens & Civic Participation.
CRISIS AREAS

The main crisis area for AOL Time Warner lies
primarily within the merger of the two companies.
The merger began in 1999 and was not complete
until 2000. The merger was a success, even though
the company as a whole took minor stock price and
profit losses. The combination, however, has
allowed them to combine their vast media,
communications, and information technologies to
create a communications giant.
Immediately following the initial releases
concerning the merger many critics surfaced. The
accusation was that AOL and Time Warner were
forming a monopoly and the FTC should not allow it
to take place. They made it past these
accusations by implementing massive
community-oriented efforts, labelled as the AOL
Time Warner Public Policy.

Other areas of stress for the two newly combined
companies include Broadband and Expansion
concerns. After leading the campaign to force
AT&T to allow open access to high-speed networks,
AOL feared that AT&T would not give them access to
these new high-speed technologies. Currently
though, AT&T holds a large stake in Time Warner
Entertainment and, therefore, has allowed AOL
access. Just in case this does not last AOL has
been investing in other means of delivering
broadband services (such as conventional telephone
lines and satellite television. Without telephone
company co-operation, AOL Time Warner cannot
expand easily into other countries. Charges are
not uniform and th